Trademarks in China: How hard can it be?
China is simply a massive market growing at an astounding rate. The appetite for foreign brands and products is developing and evolving with every year.
For many companies China is still considered to be an untapped resource, offering huge potential sales and market share. However, these companies are also wary about doing business here for a number of very good reasons.
The possibility of trademark infringement is one very big reason.
Over the years, I’ve seen various trademark infringement cases in China. Some of these include:
- Joint Venture (JV) between a Chinese company and a ‘foreign company’ breaks down and the Chinese company walks away with all the trademarks. This was probably registered/owned by the Chinese JV party and only at the breakdown does it appear how important ownership of this is. Albeit an old story, Danone vs Wahaha stands as an amazing insight in to the complexities of trademark ownership and infringement in JV’s.
(See: Danone vs Wahaha)
- Trademark squatting – 3rd party companies/individuals that are keeping an eye out for products they think will enter the Chinese market and trademarking the names/possible names/future names/logos, etc and then using this to extort money.
(See: Reuters Article)
- Competing companies with similar logo colour schemes and sounding names, seemingly hijacking an established international brand to launch their own business.
(See: Starbucks vs XingBaKe)
- Traditional infringement claims – Companies identifying brands they feel infringe on their own trademark, but it is ruled this is not the case. China works on a first come, first served basis with regards to trademarks.
(See: Dell vs DeEr)
If you haven’t covered all your bases, you may find yourself in your own trademark infringement situation. The entity that owns the trademark can take you to court and attempt to stop you from selling that product/brand under that name in that location. If they are successful in their bid to stop you selling under that name, this will add weight to their case in other jurisdictions.
This may lead to a snowball effect that you will not be able to stop. If you don’t own the trademark rights to your product’s name, fighting a trademark infringement case in China (and almost anywhere else) will most likely prove to be fruitless and a waste of time and money. Of the several options to consider when resolving this issue, the most commonly sought solutions are; offer to purchase the trademark or enter into an agreement to ‘satisfy’ the trademark owner.
There appears over the last few years to have been a massive increase in trademark applications and registrations. This is understandable with the unprecedented situation in China and to put it into perspective, in 1983 there were just over 20,000 newly registered trademarks. In 2004 there were 588,000 and in 2010 there were over a million newly registered trademarks.
The Apple v Proview case, even if it didn’t start as a trademark infringement situation, shines light onto the fact that people and companies can benefit massively if they own the trademark to any product and will probably be perceived as a way to ‘easy’ money.
Our advice would be to seek out a professional legal trademark specialist in China to make sure you have your bases covered and at least to find out who owns what already!